Local Customers Are More Profitable For Your Pellet Mill

Running a profitable pellet business is about understanding the needs of your potential customers. In terms of wood pellets you need to offer a price that is favourable to using oil or gas, and also competitive to other pellet fuel retailers. To make sure your pellet mill is profitable you need to focus your marketing efforts on securing local customers, as these will prove to be the foundation of your business and your most profitable customers.

Do not always presume bigger is better, there are many examples are very large scale pellet mill plants going under. Most of the time the reason these plants failed was because they were having to transport their product over such long distances that their profit margin was eliminated. To make a large pellet mill profitable you need to run at full capacity most of the time. Therefore you need a huge customer base, normally far beyond what the current local market requires. Transportation is not only a significant cost due to price of oil, it is also a highly volatile cost. Therefore it is very difficult to predict what the price of diesel will be from one week to the next. When you have to transport a product over very long distances even a small rise in the price of diesel can have a huge impact on reducing your profit margin. Generally then to establish a brand and profitable business it is better to start off with a small pellet mill plant, and then grow in the future. We have been asked to do this for many clients, to design a plant that can easily be expanded in the future. So again the emphasis of any pellet business is to secure local trade as this will give you stable profits and may just help you through the difficult times. To learn more please click below.